1. Understanding income inequalityConsider the town of Scholaria with a population of 5,000 people. There are 1,000 high school students, 1,000 undergraduate students, 1,000graduate students, 1,000 economics professors, and 1,000 retired economists. Suppose that the total annual income in the economy is $100 million:Each high school student earns $4,000 annually; each undergraduate earns $10,000 annually; each graduate student earns $25,000 annually; eachprofessor earns $55,000 annually; and each retiree earns $6,000 annually.The following chart shows the income distribution for the town of Scholaria.SHARE OF TOTAL INCOME (Percent)60504030&100HighSchool UndergradsGradsProfsRetirees SHARE OF TOTAL INC10High School Undergrads GradsProfsRetireesSuppose that the government sets the poverty line at an annual income of $8,000. The percentage of people with annual incomes below the povertyline in Scholaria isWhich of the following sequences correctly orders the people of Scholaria from the bottom fifth to the top fifth of income distribution?Retirees, graduate students, undergraduates, high school students, professorsGraduate students, professors, high school students, undergraduates, retireesHigh school students, retirees, undergraduates, graduate students, professorsO Retirees, high school students, graduate students, professors, undergraduatesGiven your previous answers, the income distribution in Scholaria,show income inequality.

Income inequality is an economic concept which explains the unequal distribution of income among the…

the government sets the poverty line at an annual income of $8,000. The percentage of people with annu ria is following sequences correctly orders the people of Scholaria from the bottom fifth to the top fifth of incom Cirees, graduate students, undergraduates, high school students, professors aduate students, professors, high school students, undergraduates, retirees gh school students, retirees, undergraduates, graduate students, professors tirees, high school students, graduate students, professors, undergraduates revious answers, the income distribution in Scholaria show income inequality.

the government sets the poverty line at an annual income of $8,000. The percentage of people with annu ria is following sequences correctly orders the people of Scholaria from the bottom fifth to the top fifth of incom Cirees, graduate students, undergraduates, high school students, professors aduate students, professors, high school students, undergraduates, retirees gh school students, retirees, undergraduates, graduate students, professors tirees, high school students, graduate students, professors, undergraduates revious answers, the income distribution in Scholaria show income inequality.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter20: Income Inequality And Poverty

Section: Chapter Questions

Problem 5PA

See similar textbooks

Similar questions

What are the main reasons economists give for the increase in inequality of incomes?
Explain how a country may experience greater equality in the distribution of income, yet still experience high rates of poverty. Hint: Look at the Clear It Up 'How do governments measure poverty in low-income countries?' and compare to Table 15.5.
A group of 10 people have the following annual incomes: 55,000,30,000,15,000,20,000,35,000,80,000,40,000,45,000,30,000,50,000. Calculate the share of total income each quintile of this income distribution received. Do the top and bottom quintile s in this distribution have a greater or larger share of total income than the top and bottom quintiles of the U.S. income distribution for 2005?
Using two demand and supply diagrams, one for the low-wage labor market and one for the high-wage labor market, explain how information technology can increase income inequality if it is a complement to high-income workers like salespeople and managers, but a substitute for low-come workers like file clerks and telephone receptionists.
How has the inequality of income changed in the U.S. economy since the late 1970s?
What is the poverty line?
What is the difference between poverty and income inequality?
Using two demand and supply diagrams, one for the low-wage labor market and one for the high-wage labor market, explain how a program that increased educational levels for a substantial number of low-skill workers could reduce inflame inequality.
How does the TANF attempt to loosen the poverty trap?
How is the poverty rate calculated?
To reduce income inequality, should the marginal tax rates on the top 1 be increased?
What do you think is more important to focus on when considering inequality: income inequality or wealth inequality?